Coalition urges postal task force to not raise parcel prices

Dive Brief:

The "Package Coalition" — an industry group made up of large postal users like Amazon, Express Scripts and QVC and formed earlier this month — sent a letter to Treasury Secretary Steve Mnuchin, asking for the Task Force on the United States Postal System to "pursue solutions that preserve an affordable, reliable postal package delivery system."
The coalition said it was concerned the task force would recommend USPS raise prices above rates needed to cover costs, creating higher costs for businesses and consumers.
"We know there are areas where the Postal Service needs to improve ... but package pricing is not one of them," the coalition stated in its letter.

Dive Insight:

The United States Postal Service (USPS) consistently operates from a financial disadvantage created by the 2006 Postal Reform Act. Part of that act requires the USPS to prefund its retiree health and pension obligations 75 years out. No other public agency, or competitor in the private sector, is required to do the same.

While revenue from first class delivery has been trending down, as technology such as online bill payment take a toll on letter volumes, their parcel delivery business continue to expand thanks to online commerce.

The president’s order of a review of postal rates may be to improve the financial position of the USPS. Or it may be being used as political tactic to punish Amazon, their largest customer. Amazon’s chief, Jeff Bezos, also owns The Washington Post, a critic of the Trump administration. No one is sure of the motive of the review.

However "The Package Coalition" is using political clout as well, with their stance of making sure the USPS doesn't raise prices and change the competitive landscape of parcel delivery. They want to continue to take advantage of the lower postal rates and last-mile delivery and not worry about the financial impact of higher rates on their business. It is the battle of economics and politics, two social science disciplines with a tempestuous past.

The USPS is the consumer friendly bastion of last-mile delivery and integrated logistics. It is amazing that a first class letter can be sent across town or across the country for the same price, consistently delivered within days to the front door of the addressee. All in all, the USPS is a high performing organization, even if the fodder for comedians (Hello, Newman!) and politicians alike.